How Employers Are Leveraging Benefits to Recruit and Retain Workers

As the competition for top talent intensifies, employers across industries are being forced to reimagine the workplace to meet the needs and demands of today’s workforce. The physical and emotional impact of the Covid-19 pandemic, including the Great Resignation, has shifted the workplace dynamic, creating an employment market in which employees remain willing and able to leave their jobs for better opportunities. Strategic employers are responding, leveraging benefits to recruit and retain workers and bolster the organization’s employer brand.

HR professionals worked relentlessly throughout the pandemic, focusing on protecting the health and safety of employees and keeping their organizations up and running. Unfortunately, employers have received little reprieve in the pandemic’s aftermath and are now confronted with a war for talent and the need to differentiate themselves from their competitors. And the challenges don’t end there.

Cost containment remains top of mind as companies continue to face rising costs for medical plans and other benefits. According to Alera Group’s 2022 Healthcare and Employee Benefits Benchmarking Report, the cost of benefits tops the list of concerns for HR professionals related to human capital management (35%), followed by employee retention (32%) and recruitment (27%). The survey identifies key HR tactics that strategic employers are adopting to ensure sustainability and growth and to secure their position as an employer of choice:

1. Focus on cost-containment

Employers are using a variety of strategies to curb benefits costs, particularly the costs of their health plans, which continue to increase year-over-year. Common strategies include making changes to plan design (39%), increasing deductibles or out-of-pocket maximums and implementing narrow networks (30%), and offering contingent cash in lieu of insurance for spousal plan selection (21%).

Other common cost-saving measures include implementing defined-contribution premiums and using captives as alternative means of health plan funding. The majority of employers responding to the benchmarking survey are using more than one of these strategies to contain costs, while also providing a high-performing health plan that meets the needs of their workforce. Large employers (with more than 500 workers) are more likely to turn to high-deductible health plans (HDHPs) with health savings accounts (HSAs), and many are also conducting requests for proposal (RFPs) to change carriers and lower costs.

2. Emphasis on health and wellness

To attract and retain employees and build employee engagement, employers are expanding health and productivity benefits, the benchmarking report finds. The focus on holistic well-being reflects a recognition by employers of the impact that jobs have on employees and how well-being impacts employees’ ability to do their jobs effectively.

Medical, dental, vision, and life benefits remain the most common benefit offerings, but coverage is evolving to meet the unique needs of today’s workforce. Employers are providing more choices in medical plans, for example, in response to employee demand. The majority (73%) of employers responding to the benchmarking survey offer two or more medical plan options, with preferred provider organizations (PPOs) and HDHPs being the most common plan types. Most medical plans cover behavioral health (86%) and substance abuse services (86%).

Coverage for telemedicine is on the rise, with 89 percent of respondents offering telehealth services, up from 80 percent in 2020.

Employers are also expanding ancillary coverage, reporting increased offerings for family care leave, student debt repayment, identity theft, critical illness, and hospital indemnity. This trend reflects the need for employers to leverage benefits to improve the health and quality of life for all employees, regardless of where they are in their lives and careers. Providing a variety of ancillary benefits—such as elder care, family planning, and child care support—can meet the needs and expectations of workers of various generations, genders, and races. This helps not only build employee engagement, but also strengthen the organization’s brand and position as an employer of choice, without adding a significant financial burden to the organization.

Employee assistance programs (EAPs) remain a popular option among employers for supporting employees both on the job and in their personal lives, the benchmarking report finds. Of note: More and more employers are adding financial wellness programs to assist employees in meeting their short- and long-term financial objectives, such as paying off student loan debt, saving for retirement, or purchasing a home. Among employers offering a wellness program, about 30 percent included a financial wellness component in 2022, up from 18 percent in 2021. Providing unique services such as financial planning can be a significant differentiator, helping set employers apart from the competition. EAPs can also include a range of services to support issues impacting mental health and emotional well-being, including work-related stress, grief and family problems.

3. The value of benchmarking and strategic planning

Benchmarking employee benefits is necessary for employers to ensure they attract the best talent and get the most out of their current employees. By comparing benefits against the offerings of competitors of similar size and industry, employers can identify gaps in their current benefit programs and gain insight into the ever-changing needs of both the workforce and the marketplace.

Strategic employers also use benchmarking to gauge the prevalence and effectiveness of cost containment strategies they are adopting to rein in spending. In addition, benchmarking can provide insight into how employers can differentiate themselves, by offering innovative benefits not commonly found in their industry.

In today’s tight labor market, the focus on employee health and well-being is a critical success factor for businesses, helping improve productivity, engagement, and—ultimately—recruitment and retention. As the benchmarking report indicates, the Great Resignation signals a dynamic shift in the workplace and the need for employers to adopt a holistic approach to health and well-being.

Today’s workforce has unique needs and demands that many traditional benefit programs fail to meet. Employees are seeking flexibility, choice, and purpose in their work, and are willing and able to change jobs in favor of an organization whose values reflect their own. Through benchmarking and strategic planning, employers can identify and address those needs. Otherwise, they risk losing out on top talent and the opportunity to build employee engagement and sustainable growth.

Sally Prather is the executive vice president and practice leader for employee benefits at the Alera Group. Danielle Capilla is the vice president of compliance for employee benefits at the Alera Group.

From: BenefitsPRO